Best Buy Bankruptcy Ahead?


In November 2008, Circuit City filed for bankruptcy protection.  Circuit City had the same business model as Best Buy:  selling electronic equipment in large retail stores.  Other retailers with that business model are finding it increasingly difficult to compete with online sales from companies such as Amazon, eBay, or Walmart.  Best Buy’s store sales have fallen for the last eight quarters while expenses increase.  Although Best Buy has a large cash buffer, many analysts believe it is only a matter of time before Best Buy also files for bankruptcy, perhaps in 2013. 

To the extent they have not already done so, companies that sell products to Best Buy should consider how their rights will be affected in a bankruptcy case and what they can do now to minimize future losses and avoid litigation.  Issues that should be considered are, among others, whether to retain or change existing credit terms, how to collect on unpaid invoices, how to reclaim goods in the event of bankruptcy filing, how to stop goods in transit, how to protect rights to be paid for goods delivered in the 20 days before any bankruptcy filing, whether to file a proof of claim, whether to accelerate termination of contracts, and the impact on intellectual property rights.  Companies should also review their credit insurance policies to assess potential coverage and ensure compliance with notice requirements and other conditions.

Orrick’s restructuring lawyers can help companies navigate through these issues, having worked on numerous retail bankruptcies, as both creditors’ and debtors’ counsel, including the Circuit City and Kodak bankruptcies.  If you have questions or concerns about the Best Buy situation, please do not hesitate to reach out to any one of the following lawyers:

Jonathan Guy

James Burke
Managing Associate

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Orrick, Herrington & Sutcliffe LLP | Attorney Advertising

Written by:


Orrick, Herrington & Sutcliffe LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.